The National Company Law Appellate Tribunal (NCLAT) has set aside the bankruptcy court’s approval to a consortium led by investor Kalpraj Dharamshi and including Rekha Jhunjhunwala to acquire Ricoh India.
The Principal Bench headed by Justices Bansi Lal Bhat (Acting Chair Person), V.P. Singh (Member), Alok Srivastava (Member) held-
“Resolution Professional committed a grave error in accepting the Resolution Plan of the Resolution Applicant Kalpraj Dharmshi & Rekha Jhunjhunwala after the expiry of deadline for submission of the Bid/Resolution Plan without notifying/publishing the extension of the timeline for submission of EOI, as per provision of the I&B Code and Regulations thereof. The Adjudicating Authority has also failed to appreciate the illegalities and irregularities pointed out by the Appellant.”
The order deals a setback to the efforts of Dharamshi and Rekha Jhunjhunwala, the wife of ace investor Rakesh Jhunjhunwala, to revive the printing and document solutions company that their consortium has now renamed Minosha India.
Kotak Investment Advisors, the private equity arm of Kotak Mahindra Bank which was one of the bidders for Ricoh India, had challenged the National Company Law Tribunal’s (NCLT) decision before the appellate body. It had argued that the Dharamshi-Jhunjhunwala consortium was allowed to submit its bid after the expiry of the deadline and when the bids by other bidders had already been opened.
The Appellate tribunal said the RP had “committed a grave error” in accepting the resolution plan of the consortium after the expiry of the deadline, without notifying any extension to the timelines.
“The act of the resolution professional to accept the resolution plan after opening the other bids, which were all submitted within the deadline for submission of plans, cannot be justified by any means and is a blatant misuse of the authority invested in the RP to conduct CIRP,” the tribunal said.
The Resolution Professional (RP) counsel argued that the correct procedure was followed as prescribed under the Insolvency and Bankruptcy Code and accompanying regulations. The RP also argued that Kotak Investment was one of four bidders and its plan was rejected at a CoC meeting on February 13, 2019. On the same date, the Dharamshi-led consortium’s plan was approved with 84.36% of the votes in its favour.
The tribunal further noted that,
The Adjudicating Authority has also failed to appreciate the illegalities and irregularities pointed out by the Appellant. We also noticed that the Order on MA 1039 of 2019 is passed by Member Judicial and Member Technical, but the argument was heard by only one Member Bench consisting of Judicial Member. Thus, the Appeals succeed and the impugned Orders both dated 28.11.2019 are set aside.
The CoC is directed to take a decision afresh in the light of the directions given above for consideration on the Resolution Plans already submitted within the stipulated timeline within ten days from the date of this Order.